If you’ve done any amount of buying on eBay and have a general understanding of how the eBay bidding system works, you’ve probably wondered how eBay works out the amount of the next “minimum bid” required for a bidder to bid on an auction.

Since it's a seemingly complicated system, some eBay shoppers prefer to buy items listed with the "Buy It Now" option, because it means that the transaction can be completed and payment sent immediately, instead of having to wait until an auction closes. Some shoppers also dislike bidding on auctions with reserve prices, since there is no guarantee when a bid is placed that the item will be sold at all.

eBay auctions accept bids only for a specific amount of time. To stay in the running, you must place a bid that is higher than the current bid. This amount is the current minimum bid; you must enter at least this amount if you want to bid.You may pay less than your bid if you win. When you win an auction you always actually pay only a small amount more than the next highest bid.

How the Bid System Works

Taking the time to understand the specifics of the bidding process on eBay can help you become a more savvy bidder, and reduce some of the mystery. While it may seem to be arbitrary, it isn’t; the required increment for each new bid is calculated according to a price table of “bid increments” that eBay maintains as a matter of bidding policy. Here’s how the bid increments stack up.

If the current high bid on the auction is from $0.01 to $0.99, then the next bid must be at least $0.05 higher.

If the current high bid is $1.00 to $4.99, then the next bid must be at least $0.25 higher.

If $5.00 to $24.99, the next bid must be at least $0.50 higher.

If $25.00 to $99.99, the next bid must be at least $1.00 higher.

If $100.00 to $249.99, the next bid must be at least $2.50 higher.

If $250.00 to $499.99, the next bid must be at least $5.00 higher.

If $500.00 to $999.99, the next bid must be at least $10.00 higher.

$1,000.00 to $2,499.99, the next bid must be at least $25.00 higher.

If $2,500 to $4,999.99, the next bid must be at least $50.00 higher.

If $5,000.00 or higher, the next bid must be at least $100.00 higher.

You can see how the math works out. The increments aren't based on each other but represent a percentage of the higher of the two numbers in the range.

Bidding Examples

If this seems confusing to you, don't worry, you're not alone. Here are a few examples of bids and where the next highest bid needs to fall to consider:

For an auction with a current value of $5.35, any prospective buyer must bid at least $5.85 ($5.35 + $0.50) on the auction to be able to bid.

This policy of “bid increments” helps eBay to minimize the kind of exponentially huge bidding traffic that could occur if bidders and/or buyers were allowed to outbid each other by just a penny.

Keep in mind that bid increments don't tell the whole story about eBay bidding. To understand why some bidders seem to bid over and over again immediately after you, or why the debate between auction snipers and non-snipers continues to rage, you really must also understand the eBay proxy bidding system, which uses bid increments to bid automatically on behalf of interested buyers while they're away from eBay.